SentimenTrader Blog


2019-10-17 | Troy Bombardia | Premium

With stocks still hovering near all-time highs, here's what I'm looking at: Chinese corporate profitsAs Bloomberg noted, Chinese corporate earnings are weak. The following chart illustrates the year-over-year % change in the Shanghai Index's 12 month trailing earnings per share. As of September 2019, this figure stands at -4.7% (and for October 2019 is currently tracking -4.8%).But when trailing EPS was down this much year-over-year, it wasn't clearly bearish for Chinese equities going ...

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2019-10-16 | Jason Goepfert | Daily Report

Hedge funds seem to have a low exposure to the S&P 500 and most of its major sectors; Retail sales ended a streak of 6 months in positive territory; The SKEW index just hit a 6-month high; Bond risk is dropping fast

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2019-10-16 | Jason Goepfert | Lite

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.4th time’s the charmThe S&P 500 has quickly gone from more than 4% below its prior 52-week high to within 1% of it. This is the fourth time in about 6 months that it’s tried a recovery like this, the most ever during such a tight window.Like most things, both bulls and bears will lay claim to this pattern as confirmation of their existing bias. Bears will ...

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2019-10-16 | Troy Bombardia | Premium

With stocks near all-time highs, here's what I'm looking at:Volatility indicesAs The Market Ear noted, the stock market's volatility is much lower than the bond market's volatility right now. The Treasury Note Volatility Index remains elevated, while VIX has fallen after a brief spike:When these 2 volatility indices diverged in the past, VIX had a tendency to jump over the next 2 weeks...... while Treasury volatility usually fell over the next 6-12 months:UtilitiesOver the past few weeks we ...

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2019-10-15 | Jason Goepfert | Daily Report

The S&P 500 has gone from a 4% drawdown to within 1% of its 52-week high 4 times in about 6 months, the most ever, other times it did so 3 times led to gains; The Dow Transports fell to more than 10% below their high but a DOT index of freight and passenger movement hit an all-time high; The VIX closed below 14; Gold and the dollar are moving together

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2019-10-15 | Jason Goepfert | Lite

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.Bond market warningStocks have held up well lately, more or less, but high-yield (junk) bonds are under-performing relative to other parts of the corporate bond market.The cliché is that bond traders are smarter than their stock market cousins, so this should be a troubling sign.We looked at all times since 1990 when the S&P 500 was within 2% of a 52-week ...

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2019-10-15 | Jason Goepfert | Premium

Here's what's piquing my interest so far today.Falling VolFear is ebbing a bit, and the VIX is on track to drop below 14 for the first time in weeks. The other times it did so this year, stocks rallied further 2 out of the 3 times.Historically, it has been more of a positive than a negative. It's not so low that it has proven to be a sign of complacency. Only 1 of the signals preceded a loss over the next 6-12 months.Doomsday PreppersCredit card companies keep raising the rates they charge ...

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2019-10-15 | Troy Bombardia | Premium

I recently examined the S&P 500's trailing earnings and earnings estimates. My conclusion was:Looking at the trend in earnings can help investors and traders time the market from a long term, fundamental trend following perspective. I originally only tested this concept on the S&P 500. But does this work in other western markets, like Germany, Australia, UK, Canada? Is this strategy (as Ray Dalio calls it) "timeless and universal?" I ran the following strategy on 4 different countries' stock ...

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2019-10-15 | Troy Bombardia | Premium

With the stock market virtually flat, here's what I'm looking at:Dividend yield vs Treasury yieldCNBC noted that the S&P 500's dividend yield is greater than the 10 year Treasury yield. According to Bank of America, this is very bullish for stocks because when this happened in the past, stocks significantly outperformed bonds 94% of the time over the next 12 months.Herein lies the problem. This phenomenon (dividend yield > 10 year Treasury yield) has only occurred during this bull market. ...

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2019-10-14 | Jason Goepfert | Daily Report

High-yield (junk) bonds have slid relative to other corporate bonds, a warning from "smart money" bond traders, but it hasn't been a consistent enough sign; The S&P has gained more than 5% over the past 8 months but the % of its members above their 50-day average has not made a higher high; The Smart and Dumb Money Confidence are chopping around neutral

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